Industry Article

Citi’s Mariam Rafi Discusses the Importance of Optimised Collateral Management

Mariam talks to Jerome Kemp, Senior Advisor to Baton Systems, about the evolution and importance of the role of collateral within the broader clearing context.

Hear Mariam & Jerome discussing the Importance of Optimised Collateral Management:

Asked about the reasons for the interest in collateral movements in recent years, Mariam comments that there has been a marked increase in the amount of collateral moving through the system as more of the market has moved to central clearing.

Demand for collateral, she says, is also increasing with the non-cleared margin rules on the horizon which will impact a number of Citi’s clients in September. Added to this, the COVID volatility of spring 2020 highlighted other factors around collateral usage such as margin procyclicality of the CCPs, and increased firms’ liquidity needs.

“We have been very focused on figuring out how to use both the collateral that clients post to us, and our own liquidity resources, in the most effective manner,” Mariam says.

“We can be much more nimble about using client collateral on an intraday basis.”
– Mariam Rafi

Broadening the scope of collateral that firms can use for their liquidity needs is becoming an increasingly important theme. “Flexibility to post collateral in its various forms is becoming more and more important to our clients,” Mariam says.

“CCPs are broadening their collateral scope to include a broader range of products. “As an FCM we need to be very nimble in keeping up with the growing range of assets which our clients want to be able to post to meet their margin requirements.”

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